Mexican auto parts industry in turmoil due to strike in US

It is estimated that Mexican auto parts businesses could lose up to $2 billion if the strike by three US auto corporations continues.

Mexico could be seriously hurt by strikes in the US auto industry - Photo: A General Motors Chevrolet Silverado being assembled in Silao, Mexico. (Source: WardsAuto)

On September 16, the automotive industry consulting firm Ramos Arizpe said that the strike that broke out on September 15 at factories belonging to Ford, General Motors and Stellantis - the three "giants" of the US auto industry - could have serious consequences for Mexico - a country in the key supply chain of auto parts and components for the US.

Specifically, the northern Mexican states bordering the US, where there are many factories producing auto parts and components, will be most heavily affected by the strike considered unprecedented in the past 25 years of the US auto industry.

Take the state of Coahuila, for example, where many companies produce components such as headlights, gas tanks, furniture, and doors. If the strike in the US continues, companies there could have to lay off up to 10% of their 65,000 workers.

In addition, many companies may be forced to cut shifts to reduce inventory, which is considered the biggest risk to Mexico's auto parts industry in years.

In fact, the Mexican auto parts industry has gone through similar periods in the past, which allows for fairly accurate forecasts, said Sergio Aguilar, director of automotive industry consultancy Ramos Arizpe.

Most recently, the 40-day strike by General Motors (USA) in 2019 forced many auto parts manufacturers in Mexico to cut production scale as well as the number of workers. In addition, the Covid-19 pandemic has seriously disrupted the supply chain from Mexico to the US.

Meanwhile, the Mexican Automotive Parts Industry Association (INA) predicts that Mexico’s auto parts industry could suffer losses of around $76 million in the first week of the strike. In the event that Mexican auto parts companies have to reduce their working hours, INE will assist by offering training courses to workers during their free time, focusing on knowledge related to new technologies and advanced equipment operation skills.

Previously, the United Auto Workers Union (UAW) began a strike at 0:00 on September 15 (local time) at factories of three leading US auto companies, due to the expiration of the deadline to reach an agreement with employers on a new contract.

On the social media platform X, the UAW announced that strikes were starting at General Motors, Stellantis, and Ford plants. UAW President Shawn Fain announced that for the first time in history, the union would strike at the same time at plants of three leading companies.

According to calculations by global consulting firm Anderson Economic Group (AEG), the US economy will lose about 5 billion USD after every 10 days of strike at the above factories.

Source: https://baoquocte.vn/nganh-phu-tung-o-to-mexico-lao-dao-vi-dinh-cong-tai-my-242487.html